The latest Rural Briefing from RICS addresses the challenging area of woodland taxation and valuation. A lot can go wrong as the examples we presented at yesterday’s South East Rural Update Conference demonstrated. One wood worth £70,000 but potentially five different Inheritance Tax bills ranging from nil to £28,000. Capital Gains Tax was little better with potential bills on disposal ranging from less than £5,000 to more than £11,000.
A link to the briefing paper and an introduction to it can be found here.
These slides summarise the paper. David Lewis and I presented them at the RICS South East Rural Update on 24 February 2014.
Two further observations emerged during the conference discussion. Ensuring that woodlands can be recognised as a business asset may help to tip the balance in a ‘Balfour’ appraisal of a rural estate, helping to ensure that the majority of estate activity can be recognised for Business Property Relief from Inheritance Tax. This would not only save potentially high IHT bills on woodland assets themselves, but also on other estate assets which might otherwise be unrelievable. Another follow-up question concerned the production of biomass for ‘own use’. This could indeed be a grey area, but one approach may be to ensure that the value of the timber sales is clearly accounted for in estate and woodland records.